Friday, July 25, 2014

One Area Network Across East African Community

At a regional telecom meeting held in Kigali, Rwanda, various Ministers from four East African Community (EAC) countries—Rwanda, Kenya, Uganda and South Sudan—signed an agreement that will require operators in these countries to adopt and implement the framework for a One Area Network in the region by 31 December 2014. The launch of the One Area Network will abolish roaming charges among the four countries, and subscribers traveling there will be charged as local users on the visited country’s network. Additionally, calls that originate in any of the member countries will no longer be charged at international rates but at lower local rates. According to reports, Tanzania and Burundi did not participate in the meetings.

Before August 2012, when a US $0.22 per minute tax on all incoming calls was introduced by the Rwanda Utilities Regulatory Authority and a subsequent surge of similar taxes on international calls took place across the region, operators such as Safaricom in Kenya and MTN in Uganda and Rwanda had entered into mutual agreements that allowed their subscribers to make calls at no extra cost when traveling within the EAC. Vodacom Tanzania also had a comparable deal during that time. It mimicked the borderless network innovation that was spearheaded by Airtel’s predecessors Celtel and Zain in December 2006 across its operations in Uganda, Kenya and Tanzania. However, once taxes were levied, the cost of calling across East Africa greatly increased, with operators raising their prices to pay for operating costs and realize profits.

With One Area Network, the current trend in the EAC is to reduce the high costs of making calls across borders, which according to subscribers is higher in some cases than the cost of calls to China, the U.S. or the U.K. While we have written several times about the abolition of roaming charges in the EU, it is likely that we will begin to see roaming charges reduced or eliminated in other regions such as the EAC and Russia and its Eastern European and Central Asian neighbors. We believe that this will have a positive impact not only on subscribers but on operators, as well, since the elimination of roaming rates will most likely result in increased phone use by customers while traveling.

  In the EAC, the regional economy is also likely to benefit, because lower calling rates will result in lower operating costs for businesses, and the end of roaming should help the mobile money industry, in particular. Mobile money is very much a way of life in the EAC, and it is a steady revenue stream for operators. One Area Network is just one of the initiatives to reduce roaming and international call charges that have emerged in the Middle East and Africa since 2013. Airtel and MTN both offer “roam like home” prices to their subscribers who are traveling in countries in which they operate, and we expect to see this trend expand even further.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:

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